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© dunnhumbyUSA 2010 | confidential
Rewarding the behavior you seek by knowing your customers, shoppers and consumers
13th October 2010, Chicago, IL
Presentation to: LEAD Conference
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© dunnhumbyUSA 2010 | confidential
today’s agenda………
introductions who am I?
introduce you to dunnhumby
the burning platform today’s choices
knowing and treating your customers the root causes
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© dunnhumbyUSA 2010 | confidential
to help brands and organizations
engage more completely and
profitably with their customers
by developing customer based
action plans built on integrating
“real-time” data insights, creativity
and change capability
thus delivering increased brand
value to our clients
dunnhumby mission is to drive brand value
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improving clients’ knowledge, thinking, action, and results across the globe
2010 (In Progress)Acquisition of KSS Retail
Canadian Tire
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our culture is connected and committed to our core values
Curiosity – an endless appetite to understand, challenge, innovate and learn
Customer first – we are the voice of the customer, we start with the customer at all times and follow the customer to deliver genius insights and actions for our clients’ growth and ours
Passion – relentless in our positive enthusiasm to give our clients the best to make a dramatic difference to their business and ours
Collaboration – working at our best together and communicating openly with respect and integrity, to build trust over time, for better results
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The Customer
© dunnhumbyUSA 2010 | confidential
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Offers are irrelevant to the customers who receive them due to poor targeting
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Headroom among current customers is not seen or valued, and is ignored
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There’s a focus on winning market share instead of winning over customers
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The priority is almost exclusively on short-term results
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Retailers and manufacturers are at odds over strategy and execution
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Traditional measurements are applied even when superior new metrics are available
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Creative and media choices reflect a one-size-fits-all strategy
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Consumer marketing concepts are reapplied without tailoring to the customer framework
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1. The wrong questions are being asked
2. The wrong data is driving decisions
3. Loyalty and acquisition are not balanced
4. There is little systematic improvement
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1.
The wrong questions are being asked
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Area Brand- or Store-Centric Questions
Targeted Marketing
Can we send a mailing to shoppers at the top 500 stores?
Loyalty How can I make shoppers more loyal to my brand?
Growth Is our market share growing?
Efficiency / Effectiveness
How can I simplify and standardize to achieve savings?
ROI What was the cost-per-thousand for the campaign?
Winning How can we beat the competition?
Shopping Experience
How can we change how this category is shopped and drive more shoppers to our brand?
Tracking Sales How much did we sell last week?
Shopper-Centric Questions
Can we individualize communications to our top 2MM shoppers?
Am I focusing most of my efforts on my best shoppers?
Is our share of wallet growing?
How can we learn what our best shoppers want and give it to them?
What was the ROI for the campaign over time?
How can we win with our best shoppers?
How can we put our brand where our best shoppers will naturally expect to find it?
Who bought what we were selling last week?
are you asking customer-centric questions?
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2.
The wrong data is driving decisions
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what research is used to shape your customer activity?
Source: In Store Marketing Institute’s 2008 survey of consumer goods manufacturers
65%: Survey, focus groups, panel – thin sample
50%: Scanner data – average shoppers
50%: Primarily rely on “instinct and experience”
20%: Shopper Insights drive Shopper marketing
65%: Survey, focus groups, panel – thin sample
50%: Scanner data – average shoppers
50%: Primarily rely on “instinct and experience”
20%: Shopper Insights drive Shopper marketing
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averages at the category level mask dramatic changes at shopper level
Category Unit and Sales Change
Sales Change
Unit Change
Unit Growth by Household Behavior
Unit change for HHs increasing units
Unit Change for HHs decreasing units
12%9%Frozen category
-45%92%
-3%6%Dairy Category
-52%77%
5%-13%Shelf Stable Category
-45%84%
-1%0%Breakfast Category
-44%64%
-5%-2%Beverage Category -46%
60%
Category
z
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you can’t find the right customers based on demographics
0%
5%
10%
15%
20%
25%
30%
Brand Increasers Brand Maintainers Brand Decreasers
Under 15K 15-24K 25-34K 35-49K
50-74K 75-99K 100-124K 125-149K
150-174K 175-199K 200-249K 250K+
Household Income
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behavior-based segmentation is key
Model – You are:What you earn
Where you live
What you say you are
What you do
Geo- demographics
I can’t eat at Jane’s house: No organics!
Lifestyle questionnaires
I try to tell the truth … as best I recall it.
Bottom-up behavior-based targeting
OK … now you’ve got me!
AKA Real ConsumerDemographics /
Social classI spend very
differently from my “peer.”
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develop multiple dimensions of behaviour
primary channelpreferred format (supermarket, express,gas station, online)
profitabilitybrand choice, packaging preference,weight of purchase
lifestagedemographics, what they buy
lifestylesmotivations behindshopping behaviour
“you are what you do”
promotional promiscuitycherry picking deals, bulk buying to larder fill
shoppinghabitsshare of shopping,recency & frequency
shoppingtrips missions
brand advocacyparticipation in extensions
understand each customer’s DNA to activate at the customer level
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3. Loyalty and acquisition are not balanced
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Brand $s $171,834 $718,381 $612,061 $123,516
Brand $s/HH $24.87 $5.71 $1.95 $0.70
% of $s 10.6% 44.2% 37.6% 7.6%
% Shoppers 1.1% 20.2% 50.4% 28.3%
$ / Shopper Index (954) (219) (75) (27)
Brand “A” Candy Bar Loyalty Tiers
Measures Champions Valuables Potentials Uncommitteds
# Shoppers 6,910 125,755 314,501 176,797
Ctgry Trips / Shopper 76.1 32.6 33.7 27.4
SOR % 15.4% 7.0% 2.1% 0.8%
earning and growing loyalty generates profitable growth
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Champions Valuables Potentials Uncommitted
Increased Stayed the same Decreased Left the brand
10% lost
60% buying
less
focusing on acquisition over loyalty can be an expensive choice
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4.
There is little systematic
improvement
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the feedback loop is much shorter but many are not taking advantage
Annual MarketingPlanning
Copy and Media Development
Launch Message / Media Evaluation
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
WAS
IS
Segment 1
Segment 2
Segment 3
Segment 4
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persistent and systematic improvement creates breakthrough results
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20.0%
22.7% 22.7%21.5%
18.4%
7 8 9 10
Phase 2(178) index vs. Industry Avg.
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27.2%28.7%
33.3%
35.7%
12 13 14
Phase 3(265) index vs. Industry Avg.
% of HHs redeeming at least one coupon
Earliest Most recent
17.0%16.0%15.0%
16.0%18.0%
1 2 3 4 5
Phase 1(139) index vs. Industry Avg.
Industry Avg.
(11.8%)
42.5%
15 16
49.2%
Phase 4 – Now a (389)
index vs. industry avg.
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make better business decisions by putting the customer at the center
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Previous Program1500 line program
Customer Centric ProgramBased on ~500 lines important
to PS customers
% o
f ba
ske
t /c
ust
omer
spe
nd
getting the right price program implemented
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how customers engage with promotions
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Loyalty propensity
Pro
mo
tio
nal
pro
pen
sity
Loyals
Pantry-LoadersDeal-Seekers
Repertoire
promotion escalation does…
this to sales on deal… …this to customers……this to value
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cultural attributes will differentiate winners who will grow brand value
Getting measurement, rewards, talent aligned with desired outcomes
Getting measurement, rewards, talent aligned with desired outcomes
Being loyal to those who matter most, to
earn and grow loyalty
Being loyal to those who matter most, to
earn and grow loyalty
Using insight to challenge embedded ways of thinking and
working
Using insight to challenge embedded ways of thinking and
working
Leading with customers, not with
brands
Leading with customers, not with
brands
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© dunnhumbyUSA 2010 | confidential
thank you